4.2 - GEF IW Financial Considerations
GEF IW project experiences on financial issues are available here.
The following topics are summarised here on financial issues (for project financial management reference should be made to the agreements with the GEF implementing/executing agencies and the delegation of authority by these organisations to the project management team):
GEF IW projects are designed to utilise GEF funds to catalyse other sources of funding (national, private-sector, bi-lateral and muti-lateral donors). Without this co-financing the full scope of the GEF IW projects would not be achievable. It is essential to the project reporting (e.g. PIRs) that careful assessments of both committed co-financing and new sources are made by the project. It is likely that the project will need to provide some guidance to countries to harmonise the approaches used for reporting both in-kind and cash co-financing.
Project management teams should also distinguish between co-financing that is clearly linked to the project’s goal, objective and outcome and parallel funding to related initiatives but for which the project (or more correctly, the PSC) does not have any direct influence.
Co-finance for GEF projects (http://www.thegef.org/gef/sites/thegef.org/files/documents/C.20.6.pdf) is important because it:
- expands the resources available to finance environmental objectives;
- is a key indicator of the strength of the commitment of the counterparts, beneficiaries,
- and Implementing and Executing Agencies to those projects; and
- helps ensure the success and local acceptance of those projects by linking them to sustainable development, and thereby maximizes and sustains their impacts.
The project management team should be familiar with the amounts and approaches by the GEF Agency to their fees. This will help in explaining to project stakeholders the purpose of these fees and how they are used by the Agencies.
GEF IW projects are capped at 5% (GEF 5) with regards to the level of funding associated with the project management. While this is inevitably a challenge for project management staff to execute complex programmes often over a wide geographical region, it is important that this figure is adhered to as presented in the approved project document. The funds associated with project management should be targeted specifically at those actions that are linked to this activity and project management activities that are more closely aligned with technical activities should be allocated to these components.
All changes to the project budget need to be agreed by the PSC and approved by the GEF agencies involved. Prior to any considerations for requesting changes, the project management team should assess the scale of any change to budget headings and if these changes are likely to have an impact on the expected goal, objective or outcomes of the project then these changes will need to be considered by the GEF.